The holidays are almost here! Are you prepared?
Are you thinking about all of the shopping that you need to do or have you completed most of it already? Do you know how you will pay for all of the expenses that are a part of every holiday season? What is your financial strategy? Do you have one?
Do you belong to a Christmas Savings Club and put money away throughout the year or do you head to your local credit union to apply for a loan to cover your holiday expenses? Your answer says a lot about how you manage your finances. While there isn’t necessarily a right or wrong answer, one approach is clearly going to set you up for a more satisfying holiday experience.
When you save money for the holidays, you are more prepared for the unexpected, you pay less for your purchases, and you are better able to make decisions on your terms within your time frames. With your money in hand, you will be ready if a sale pops up in August. You can typically pace your holiday shopping over any period of time that works for you and you will have more choices because of the flexibility that you created for yourself.
When you borrow money to finance the holidays, your choices are more limited, your purchases are more expensive, and you are more subject to someone else’s terms and conditions. The second you receive borrowed funds, you begin to pay for the use of those funds. The interest that you owe automatically increases the price of the purchases that you make - meaning that your funds will not go as far. You probably won’t have as wide of a selection to choose from because you will be shopping at the latter end of the season and the time that you make available to shop will be subject to shipping restrictions, increased postage and handling costs, and/or crowded stores and the hours they choose to be open.
This is not a “have or have not” discussion. Some people may make themselves believe that their financial situation dictates that they have to borrow to enjoy a nice holiday season. Not true. Whether you pay for your holiday shopping with funds that you have saved or funds that you have borrowed boils down to your ability to plan effectively and to use a little will power when necessary.
My beloved mother-in-law is a great example of this point. She raised five children and she worked hard her entire life. She wasn’t needy in the sense that she made sure that there was food to eat and that her family was clothed, but she was not financially comfortable either. She had to forego many of the finer material things that many of us strive to accumulate as she strove to make ends meet.
Whatever she had or didn’t have, however, was secondary to her love of Christmas and her determination to make sure that she would provide a wonderful holiday experience for her family no matter what her financial circumstances happened to be.
At the start of each year, she would begin saving money from each and every paycheck. Her funds would slowly start to accumulate. She had an established limit for how much she could afford to save and then spend on each of her children and grandchildren. As the year would progress, she would be on the lookout for sales so that she could make her funds stretch as far as possible.
She always seemed to know what she wanted to buy with little or no help from anyone else and she always found a way to get the absolute maximum from the funds that she had. She found a way to let each family member know that she had been thinking about them throughout the year and she demonstrated it through the gifts that she provided.
She would come up with her own unique ideas and would remember the small, but really important details about what her kids and grandkids liked so that she could personalize her gifts for each recipient.
These presents were never extravagant, but when Christmas arrived the entire front room of her house was filled, seemingly to the ceiling, with something for everyone.
We all know, or we should anyway, that the holiday spirit cannot be measured by the quantity of gifts that you give or receive. It cannot be measured by anything that is tangible or able to be purchased.
In our family, the holiday spirit was on display through one woman’s determination to create a memorable experience for her family every year, her unbridled enthusiasm for Christmas, and her selfless devotion to each of us. Her love of Christmas and the holidays was infectious and it had a tremendous positive influence on us. The gifts were wonderful, but just a part of the joy that she would create and the fun that we would have.
The bottom line is that she did what she needed to do to fulfill her dream of what she wanted Christmas to be like for her family. It was a goal that was personal to her and she made it a point to dedicate herself to it year after year.
Whether or not your financial decisions are at all impacted by the holidays, there is something for all of us to learn from this example. The status of your financial situation should not be measured by the amount of money you have or don’t have, but rather the decisions that you make and the actions that you take to align your finances with your personal goals and financial objectives.
We also know that money cannot buy you happiness, but when you manage it effectively, you can at least remove financial worries from your list of concerns so that you can concentrate on other, more important things.
If you’re lucky, you have your own version of my mother-in-law in your family. If not, maybe you can be the one who leads by example. You may even find a little more holiday spirit along the way!
This article is part of Scott Arney's educational series, entitled The Serial Decision Maker.